Today’s Breakfast Brief looks at what we should expect in tomorrow’s WASDE and why winter wheat continues to get its legs kicked out from underneath them.
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Grain markets this morning are mostly in the red on a stronger US Dollar and some bearish expectations from a usually-quite December WASDE report from the USDA.
Last week, in the first full trading week of December, grain markets trended higher to start things off before giving up some gains in the back half of the five days. This was mainly due to a stronger US Dollar and some bearish headwinds from Statistics Canada on December 6th.
January canola only finished the week down 0.2%, holding up above $505 CAD per metric tonne on the Winnipeg futures board (although we saw it lose that line in the sand this morning). Moreover, the March canola contract dropped to a seven-week low on the news that there’s more canola available than previously thought. Losses were likely limited by the weakness of the Canadian Loonie against the U.S. Dollar, as the former lost 1.2% this week.
After the StatsCan report last week, I took an in-depth look at the StatsCan production report for all 12 crops we cover in GrainCents, including the next catalysts we’re watching for to time our next sale.
Login to view or subscribe to any of the 12 crops in GrainCents. There are less than 50 of the 300 “breakfast” coupons left. Use it at the check out page to get a 25% discount to a year’s worth of sales recommendations and analysis on the most important factors affecting your grain.
This week’s trading action will be highlighted by another monthly WASDE report from the USDA, this one out on Tuesday, December 12th at noon. Expect an increase in wheat and soybean inventories, but corn’s carryout number will decline a bit.
There are some eyeballs who are glued to the South American production numbers. There is some rain in the forecast for next week in Argentina. This would help alleviate some of the dryness that a La Niña event is creating.  However, this wetter weather won’t be reflected in tomorrow’s December WASDE report.
Login to your GrainCents account to see pre-report charts, what we’re looking for, some ”What if?”situations, and whether those situations are bearish or bullish for grain prices.
One thing we should not expect from the USDA is bigger Chinese corn import numbers.
There continues to be more about China needing to import more corn. However, we have to question some of the numbers surrounding China’s corn import needs, and more specifically, the timing of numbers being thrown around by analysts.
More or Less Wheat?
We also have a report coming out from the USDA regarding the number of abandoned spring wheat and durum acres. Some think abandonment or unharvested US hard red spring wheat acres could be as high as 30% to 40% nationally while the official number is currently 10%. Specific to states like the Dakotas and Montana, there’s expectation though that we could see some higher numbers.
Staying in wheat, March 2018 soft red winter wheat prices on the Chicago Board of Trade hit a new contract low last week.  This was because of the strength of the US Dollar and SovEcon increasing their estimate of this year’s Russian wheat crop to 84.2 million tonnes. SovEcon also increased its estimate for the 2018/19 Russian wheat crop to 76.7 million tonnes.
Read more on our thoughts on the bearish factor that is Russian wheat here.
Overall, it’s all about the USDA this week.
For me, it’s more than just that! I’m in Indianapolis this week for the Farm Journal AgTexh Expo. If you’re around, stop by our booth and hear me talk about Grain Marketing 3.0 on Tuesday, Dec 12 at 2:45 EST / 1:45 CST.
At 7:45 AM CDT in the North American futures markets (*not cash prices*):
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.2794 CAD, $1 CAD = $0.7816 USD)
Mar Corn: -1.5¢ (-0.45%) to $3.513 USD or $4.517 CAD
Jan Soybeans: -5.5¢ (-0.55%) to $9.843 USD or $12.658 CAD
Jan Soybean Meal (per short ton): -$3.90 (-1.2%) to $327.80 USD or $421.55 CAD
Jan Soybean Oil (cents per lbs): -0.09¢ (-0.25%) to 33.53¢ USD or 43.12¢ CAD
Mar Oats: -1.8¢ (-0.7%) to $2.403 USD or $3.09 CAD
Mar Wheat (Chicago): -3.3¢ (-0.8%) to $4.158 USD or $5.347 CAD
Mar Wheat (Kansas City): -2.8¢ (-0.65%) to $4.135 USD or $5.34 CAD
Mar Wheat (Minneapolis): -0.8¢ (-0.1%) to $6.105 USD or $7.851 CAD
Jan Canola: -3.9¢/bu / -$1.70/MT (-0.35%) to $11.417/bu / $503.40/MT CAD or $8.878/bu / $391.44/MT USD
COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.